Who Needs a Stimulus Package when You Have a Volcano?
The economic consequences of the volcanic ash cloud covering Europe have been the topic of much discussion in the last few days. The doom and gloom set has been totaling up the economic costs of disrupted travel and commerce and the media are reporting the various lengths to which people have gone to get where they need to go. I think they have missed the simple economics of it all. The ash cloud has been great for the economy. Let me swiftly explain.
Think of the stranded travelers in Europe who are now spending money on food and lodging that they would not have spent otherwise. What a boon to the hotel and restaurant industry at the airports and elsewhere! Think of the people like John Cleese who took a $5100 cab ride from Oslo to Brussels. What a glorious time for the taxicab industry! When is the last time cabbies got fares like that? Rental cars, trains, and even boats are rolling in the profits the last few days.